broadbandThe Universal Broadband Act introduced in the House of Representatives yesterday aims to expand the contribution base from which funding for the FCC’s Universal Service Fund (USF) program is drawn. The USF, which has four sub-programs, has increasingly been focused on helping cover certain broadband costs, but has continued to be funded as a percentage of long-distance voice revenues. The bill calls for funding to be collected as a percentage of voice and broadband revenues.

The bill is bi-partisan and was introduced by Collin Peterson (D-Minn.) and Don Young (R-Alaska). Also sponsoring the bill are T.J. Cox (D-Cal.), Hal Rogers (R-Ky.), Angie Craig (D-Minn.), Frank Lucas (R-Oklahoma), Luis Correa (D-Cal.) Jeff Van Drew (R-N.J.), Ed Case (D- Hawaii) and Vicente Gonzalez (D-Texas).

The USF program has a budget of about $8 billion annually. About half of funding goes to the high-cost program, which helps cover the cost of providing broadband and voice in high-cost rural areas. The remainder goes to the Lifeline program, which covers some broadband and voice costs for low-income households; the E-rate schools and libraries program and the rural telehealth program. The latter two programs also are heavily broadband focused.

The USF initially focused on voice services, which is why funding initially was collected as a percentage of long-distance voice revenues. Those revenues have been declining as the cost of voice services declines and as more people cancel voice service, which has caused the contribution factor – the percentage of long-distance voice revenues that goes toward the USF — to climb.

The contribution factor varies from quarter to quarter with some ups and downs, but the overall trend has been upward, with the factor reaching as high as 25%. As a recent Telecompetitor analysis showed, there is a serious question whether the current funding process can be sustained in the coming years.

The Universal Broadband Act
“By directing the expansion of the USF contribution base to include broadband access services – those very services that have become a primary focus of our country’s shared universal service mission – this bipartisan bill, which NTCA endorses wholeheartedly, charts a course for steadier long-term support of the USF program on a more equitable basis, and it will, therefore, help to promote the achievement of all aspects of that mission,” said Shirley Bloomfield, CEO of NTCA – The Rural Broadband Association, in a press release about the Universal Broadband Act.

Said Derrick Owens, senior vice president of government and industry affairs for WTA – Advocates for Rural Broadband: “If Congress were designing the USF program today, it would never structure it the way it is currently structured. This bill would fund USF consistent with the services being offered in the 21st century.”

The Universal Broadband Act also would require the FCC, the USDA and the National Telecommunications and Information Administration (NTIA) to “consult with one another regarding the distribution of [federal financial assistance] for the deployment of broadband services in rural areas.”

Additionally, it would require the FCC to submit a yearly report to Congress including data about unserved areas and about USF expenditures for the year.

The Universal Broadband Act will have opponents, who will refer to it as “taxing the internet” and who argue that including broadband in the contribution base would cause broadband prices to rise.

If the idea of expanding the USF contribution base to include broadband is ever to succeed, however, now would seem to be the time. The current COVID-19 pandemic has drawn attention to the need for universal broadband and the lack of adequate broadband in rural areas.

Image courtesy of flickr user Sean MacEntee.

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2 thoughts on “Universal Broadband Act Would Expand USF Contribution Base

  1. Rural internet service is doing fine, thanks to hundreds of small business 'WISP' style ISPs. In many cases it's better than suburban service. 100Mb+ to the home with no government subsidies or strings attached.

    We're not obtuse, and yes this is in fact about 'taxing the Internet', adding additional control layers onto the fading Wild West aspect of this former Frontier of the Mind (JP Barlow). We don't need any of your stolen money just so people can watch Netflix in multiple rooms.

    – A WISP Owner-Operator.

  2. A proven good concept: take a little from all those who have, to help those who don't have #Broadband. In my state of ME, rural internet is -not- doing fine. Programs to help financially are in place, but do not provide near enough $$ to satisfy the need. So, the Universal Broadband Act seems to be a good idea, without knowing much about the details. However, we all know how tricky those can be.

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